AT&T said it added 2.8 million domestic HBO Max and HBO subscribers in the second quarter, raising its total to 47 million domestically--up 10.7 million year over year--and 67.5 million globally.
The investment in HBO Max resulted in lower earnings at AT&T’s WarnerMedia unit, which the company is in the process of selling to Discovery. AT&T is also in the process of selling direct TV, ending its expensive foray into the media business in order to concentrate on broadband and mobile connectivity.
AT&T now says it expects to have 70 million to 73 million global HBO Max and HBO subscribers by the end of the year.
“We’ve grown HBO from a $6 billion business that wasn’t growing to an $8 billion run rate that grew at 40% this quarter,” said AT&T CEO John Stankey on the company's earnings call Thursday morning.
At WarnerMedia,, operating income was down 11.3% to $1.7 billion from a year ago as revenue gains were more than offset by investment in HBO Max and higher sports costs.
Warner Media revenues were up 30.7% to $8.8 billion. Subscription revenues were up 21.3% reflecting a 38.5% increase in direct-to-consumer HBO Max and HBO subscription revenues.
Advertising revenues jumped 48.5% to $1.7 billion with the return of the NBA and continued strength in news.
Second quarter net income was $1.5 billion, or 21 cents per share, up from 1.2 billion, or 17 cents a share, a year ago.
Revenue rose 7.6% to $44 billion.
AT&T reported that in Latin America its Vrio video unit lost $25 million, down from a $36 million loss a year ago as subscribers declined by 239,000. AT&T on Wednesday said it agreed to sell Vrio to Group Werthein.
“We’re pleased with our performance and our momentum is strong,” Stankey said in a statement. “For the fourth consecutive quarter, we saw good subscriber growth across wireless, fiber and HBO Max. Mobility delivered strong service revenue, EBITDA and postpaid phone growth. Our fiber business, which leads on customer satisfaction, grew subscribers and penetration. HBO Max had another strong quarter and is ahead of plan to be a leading direct-to-consumer streaming platform, with both subscriber- and ad-supported choices. As a result, we’re raising our global HBO Max year-end forecast to 70 million to 73 million subscribers. Also, we’re updating full-year guidance for consolidated revenue, wireless service revenue, adjusted EPS and free cash flow.”
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